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NATGAS: Globalisation of Gas Markets Appears Unstoppable: IEA

NATGAS
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The globalisation of regional gas markets appears unstoppable, as regional hubs become increasingly inter-linked with flexible LNG, the IEA’s Greg Molnar said.

  • Consequently, one region’s supply-demand dynamics can influence another’s pricing.
  • The best example is the growing connectivity between TTF and JKM prices, which rose from 60% in the 2010s to over 90% since 2020, Molnar said.
  • LNG trade has become increasingly flexible, underpinned by destination-free contracts and growing spot supply, now around 35-40% of cargoes. It was just 10% in the early 2000s
  • The gradual eroding of oil-indexed LNG contracts, down from 80% of contracts in the early 2000s to around 50% in 2023, is creating room for hub-indexed formulas.
  • However, Molnar added that each market is by definition regional, containing its own particular fundamentals.
  • The coming wave of new LNG supply projects fuelled by Qatar and the USA should further deepen liquidity and increase the LNG market’s flexibility.

 

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The globalisation of regional gas markets appears unstoppable, as regional hubs become increasingly inter-linked with flexible LNG, the IEA’s Greg Molnar said.

  • Consequently, one region’s supply-demand dynamics can influence another’s pricing.
  • The best example is the growing connectivity between TTF and JKM prices, which rose from 60% in the 2010s to over 90% since 2020, Molnar said.
  • LNG trade has become increasingly flexible, underpinned by destination-free contracts and growing spot supply, now around 35-40% of cargoes. It was just 10% in the early 2000s
  • The gradual eroding of oil-indexed LNG contracts, down from 80% of contracts in the early 2000s to around 50% in 2023, is creating room for hub-indexed formulas.
  • However, Molnar added that each market is by definition regional, containing its own particular fundamentals.
  • The coming wave of new LNG supply projects fuelled by Qatar and the USA should further deepen liquidity and increase the LNG market’s flexibility.

 

Keep reading...Show less